Asked in Business Formation and Business Law for Missouri

Q: is it illegal to keep my name on business loan of business I was bought out of?

my husband sold his part of a business to other partner but his name was on the business loan and was not removed and he also had life insurance policy used as collateral on that loan in his name only at this business. He died of cancer and that life insurance policy in his name only was used to pay off the loan. Is this not fraud? Should his name not have been removed off the loan when he was bought out?

1 Lawyer Answer
Ronald J. Eisenberg
Ronald J. Eisenberg
PREMIUM
Answered
  • Chesterfield, MO
  • Licensed in Missouri

A: My condolences for the loss of your husband. The buyout of his interest was a contractual obligation. If you are uncertain, have an attorney review the contract to see if it required the other party to refinance the loan so that your husband was no longer a guarantor. It’s not a matter of legality but rather of civil contract law. From what you’ve posted, I see nothing fraudulent.

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